Sustainable business is now an imperative. Climate change is top of mind for leaders worldwide who are committing to driving down greenhouse gas (GHG) emissions through ambitious net-zero targets. They are responding to increasing industry regulation, as well as pressure from selective consumers who are scrutinizing brands’ eco-credentials and demanding companies transition to more sustainable products and means of production.
Sustainability is not just good for the environment; it is also good for the bottom line, by increasing resource efficiency, improving governance practices, cultivating a positive reputation, and future-proofing against regulation.
What’s more, investors are now going beyond “negative screening” and actively backing businesses that are leaders in sustainability, in pursuit of above-market returns. Environmental, social, and governance (ESG) reporting is becoming a boardroom priority, as the disclosure is a means of increasing transparency to stakeholders, demonstrating progress toward goals such as reducing carbon emissions, and making responsible use of resources.
SMEs Help Decarbonize Global Supply Chains
While many large global corporations have led in taking sustainable business action, small businesses are also stepping up. Supply chain emissions are typically almost 12 times greater than operational emissions, so many large companies are now looking to cascade climate action through the value chain to their suppliers — often SMEs, which account for 90% of the world’s businesses. Without the active participation of every company in these often-fragmented supplier landscapes, decarbonization of corporations’ supply chains will prove impossible.
Acknowledging that SMEs need to play an active role in the transition to net-zero is one thing, but embedding sustainability into their business practices, processes, product development, operations, and strategy is another. To avoid getting left behind in the green economy, SMEs will need to be able to measure and report on their business’ environmental impact and performance — data that will increasingly become a requirement for tenders, framework agreements, and contracting. To remain competitive and ensure longevity, SMEs will also have to start working more closely with their own supply chains to find ways to lower emissions beyond the scope of their immediate operations.
One impediment for SMEs has been that sophisticated sustainability management tools are often built for large enterprises to calculate their carbon footprint across complex supply chains, system landscapes, and organizational structures. Large companies often have dedicated sustainability and IT experts, while their smaller counterparts often lack in-house expertise and financial resources to implement these sustainable tools and practices.
That is why the trickle-down effect has been slow to manifest — until now.
Simplifying Eco-Accountability for SMEs
SAP Product Footprint Management for clean operations is built to specifically address the needs of small and midsize manufacturing and product-centric companies. The low-cost, low-effort solution streamlines and simplifies carbon management, from raw materials and production to consumption, waste prevention, and recycling.
The solution is designed to be easy to use and implement by lines of businesses rather than sustainability experts. It allows SMEs to measure and manage the bottom-up carbon footprint of individual products from cradle to grave and across the value chain. It is fully auditable and complies with the GHG protocol by creating the company-level inventory needed to identify a business’s emission sources and track changes over time.
Wolfgan Korner, co-CEO of all4cloud, points out, “We are delighted that SAP is providing a midmarket solution for sustainable corporate management in the cloud. CO2 identification and derivable savings potential go hand in hand.”
The solution provides actionable insights that can be used to:
- Make informed decisions about product portfolios, investments, and procurement
- Support the shift from resource efficiency to eco-efficiency
- Easily and transparently disclose sustainability efforts to investors, customers, consumers, employees, and regulators.
SAP Product Footprint Management for clean operations is built on the SAP Business Technology Platform (SAP BTP) and is designed to readily integrate with the enterprise resource planning (ERP) solutions for SMEs, SAP Business ByDesign and SAP Business One. It is also open and flexible to accommodate other data sources, such as integrated smart metering systems, and will be extensible by SAP partners. As relevant environmental standards emerge and evolve, these will be incorporated into the solution as part of SAP’s continuous development road map.
Leveling the Green Playing Field
“We want our customers to scale their climate actions and SMEs are an important part of this systemic change,” said Gunther Rothermel, senior vice president and head of SAP S/4HANA Sustainability Management. “SAP Product Footprint Management for clean operations answers the resources and realities of growing small businesses that are looking to simplify their sustainability accountability. The solution will play an integral role in countries with a high carbon price, which will provide organizations the financial incentive to reduce their emissions in line with national targets.”
Last year, SAP introduced SAP Product Footprint Management, which enables larger customers to reduce the cumbersome and time-consuming effort of integrating data and deriving environmental footprints on product level and at scale. However, 80% of SAP’s customers are SMEs, so SAP Product Footprint Management for clean operations is a right-sized tool for growing businesses.
Eliminating wasteful practices and doing more with less is simply good business practice, particularly for SMEs that are already battling the big players on margins. Any business that wants to supply to multinational corporations will increasingly have to compete on sustainability, and emerging supply chain and investment rules will mean that companies large and small will ultimately face a growing compliance burden.
Accounting for between 50% and 70% of value added in OECD economies and contributing an average of 33% of GDP in emerging economies, SMEs have just as big a role to play as multinationals when it comes to sustainability. They have the advantage of being nimble enough to make fundamental changes to their operations and culture today that can have a positive impact on planet and profit for decades to come. Those that gain control over their carbon emissions early are effectively safeguarding their license to operate and giving themselves a significant advantage over their laggard competitors.
“The climate-neutral production of our frozen pizzas was and is very important to us. But climate neutrality alone is not enough,” said Paul Lomba, CIO of Gustavo Gusto. “We want to know exactly what our CO2 footprint is so that we can optimize it. As an IT decision-maker, you must know that calculating CO2 emissions is a complex task. SAP Product Footprint Management for clean operations simplifies the calculation of CO2 emissions. Due to the high level of integration into the SAP world and the cloud approach, the solution is quickly available and allows to track the success of the implemented CO2 reduction measures.”
Experience SAP Product Footprint Management for Clean Operations
SAP is offering a free 30-day trial of SAP Product Footprint Management for clean operations. Test-drive a live system to get insights into the carbon footprint of your own products and an initial idea of where you can take action to reduce your business’ emissions. Register for a free trial here.
Mark Innes is portfolio manager for SME Solutions at SAP.
